The most pressing privacy challenge regarding energy consumption data is the need for education. Consumers need to understand what constitutes energy consumption data and potential privacy concerns.  Utilities and energy service providers need to learn the best practices for collection, transmission, use, and storage of energy consumption data.  Regulators and lawmakers need to consider the policies and laws that can help or hinder protection of personal and business energy consumption data.  Let’s examine a few examples that can help us ensure privacy of sensitive information and how it might be used. 

The Payment Card Industry Data Security Standard (PCI DSS) covers security management, policies, procedures, network architecture, and software design practices for merchants who store, process, or transmit credit card data.  The sponsoring industry association, the PCI Security Standards Council, offers certification courses for companies and individuals to ensure compliance competencies and auditability.  Most electric utilities are already aware of the PCI DSS policies because the vast majority of them accept credit cards for payments.  Could similar policies be applied to the transmission and storage of energy consumption data?  Certainly.  What is less certain is whether all energy data should be considered as sensitive as personal credit card data.

The ability to identify energy consumption data as belonging to you or to me is important to our discussion about privacy.  Consider a financial budgeting service like Mint.com.  Consumers voluntarily enroll with this site and share their personal financial data on bank and investment accounts in order to obtain information on how to manage their financial assets.  The site makes it very clear in their privacy policy that they may anonymize and aggregate personal information to sell to advertisers for marketing purposes or researchers studying consumer spending habits.  Your information, minus personal identifiers, has value to other businesses.  However, this company is hoping that you’ll find that the value of their free services outweighs any qualms about being the target of unwanted marketing campaigns. 

The energy consumption data that utilities can collect has high value for consumers and other parties.  Just look at grocery and drug stores, which offer voluntary enrollment programs that entice consumers to allow their purchases to be tracked through use of a card scanned for each transaction.  For the retailer, this behavioral information can be mined to develop detailed views of spending habits, analyzed to determine what store promotions would be most appealing, and sold to other firms.  Participating consumers enjoy reduced prices and special promotions – so they have received some value in exchange for reduced privacy in their spending habits.  Will we see utilities and energy service providers offering rebates on bills in exchange for our consent to allow them to analyze that information for internal use and or use by other companies?

This question may be answered at the complimentary Energy Collective webinar on Wednesday, September 8^th at 10AM Pacific time.   Join us to build your knowledge about developing the right energy use data practices and policies. 

Customer service orientation.  When was the last time your utility asked you to complete a customer survey rating their service?  There was a time when telecommunications companies didn’t forge much of a relationship with customers, but competition has changed that situation.  There is nothing that prevents utilities from developing more outreach to ratepayers to obtain feedback.  Telecom companies learned to do it through advisory boards, customer satisfaction metrics, and communication plans that deliver news in multitude of channels to effectively push information.  Today’s ratepayer may be tomorrow’s customer with a selection of vendors who buy and sell electricity.  Smart utilities should develop Consumer Enlightenment Models now in anticipation of a future with more retail choices.   

Mobility.  Once upon a time, phones were tethered to physical locations. Today, phones roam around, and telecom companies produce billing records that identify date, time, place, and length of calls as well as text messages, internet use, and manage price schedules based on time, geography, and other factors.  The advent of electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) mean that electric meters will be roaming around in large numbers.  Utilities can take a few lessons from telecom companies about billing systems that track roaming charges and required changes to internal operations to support mobile meters. 

Technology adoption at the network edge.   The telecom industry and the electric utility industry share a common and ingrained fear – the fear of unproven technologies.  There’s a sound basis for this fear – given the vital services provided by electric utilities and the phone companies, it would be unthinkable to introduce a new product or application that could bring down a network delivering either electricity or dial tone.  It would also be a career-killer.  Therefore, any new technology undergoes rigorous testing in internal labs, and this testing is duplicated in each utility because each utility network is unique.  This testing process means that technologies are adopted at a slower pace than is commonly seen in some industries, and discourages innovation. 

The “edge” of today’s electrical grid is where the meter hangs on the wall.  The Smart Grid pushes the edge into residences and businesses, and this is the area of great innovation potential.  Smart meters, whether new or retrofitted electromechanicals, are similar to smart phones – there are many applications that can be enabled by them.  This means opportunities to identify external test labs and develop certification programs that do not endorse any edge products but do provide assurances that they won’t “break” the network either.   Utilities should study how the mobile telecom carriers accommodate innovations at the edge of their networks – smart phone applications – and take some notes about setting up simulation programs and testing environments. 

There are other similarities between telecom and electric utilities as well, but these listed here, plus the deeply embedded sense of mission and monopoly skills noted in last week’s blog make the case that forward-thinking utilities should learn from history instead of re-living it.

HEMS solutions usually include some sort of In-Home Display (IHD) that communicates information that ranges from current electricity rates, home electricity consumption rates, and what I term “home operations metrics” like temperature and security status. These IHDs can be wall-mounted displays or standalone, battery-operated wireless displays, or even visual devices that simply glow a different color to indicate home consumption or real-time tariff rates.

In the current electrical grid, the utility’s relationship with a residential ratepayer ends at the meter, affixed to the outside of a home. Bills arrive after the fact – at a minimum a month after your electricity use. HEMS and IHDs completely disrupt this consumer engagement model, and offer the opportunity for utilities to extend their relationship inside the home with much richer content and real-time data. True, utilities have websites that consumers can visit, but this information is relatively static.

Smart Grid-enabled HEMS solutions can deliver information that residential users would find compelling – such as real-time billing information mentioned above, tailored suggestions about how to trim their electricity bills, offers for participation in demand response programs to reduce rates, and more. This information empowers consumers to make educated decisions in real-time about how to manage their electricity consumption. That’s the good news.

The bad news is that, operationally and culturally, utilities are not accustomed to selling to residential end users. They don’t inhabit a competitive world where they must fight for mindshare and market share. If you look at the take rate for utilities’ consumers to sign up for electronic billing as an indicator of their selling capabilities, it is abysmal. Only 17% of all residential utility customers have enrolled in electronic billing. In comparison, 40% of telecom customers have electronic billing. Clearly, there’s a problem in utility outreach and education to sell consumers on a program that has solid environmental and convenience benefits.

If utilities have low success rates in getting people to enroll in simple programs like electronic billing, then there are real challenges in communicating complex and layered messages about the benefits of HEMS solutions and associated IHDs. As I noted in last week’s blog about PG&E’s rollout of smart meters, residential end users will have the opportunity to have a very visible and very disruptive technology introduced in their homes. If it’s done well, not only do the utility rate payers benefit, but overall we all benefit from fast adoption of Smart Grid solutions. However, technology rollouts that result in confusion, opposition, and lawsuits have negative impacts on everyone.

Utilities are depending on HEMS solutions to enable widespread participation in demand response and energy reduction programs. The stakes couldn’t be higher to plan and conduct effective rollouts of these HEMS applications, starting with clear messaging about the benefits of HEMS solutions to average residential customers. Not every consumer embraces change – especially when we have all been conditioned to regard electricity as a cheap and plentiful commodity that doesn’t require much attention on our part. However, we can be educated to welcome changes such as smart meters and HEMS solutions, as some utilities have successfully demonstrated.
HEMS rollouts must clearly articulate the benefits to end users – what’s in it for them, what’s required of them, how to get more information, how to get support when things break, and examples of what the solution looks like and options for IHDs. A successful HEMS rollout requires a sophisticated sales and marketing strategy. Next week’s blog will explore some of the key tactics in a successful strategy.

Flat Panel TVs Get Energy Efficiency Standards in California
Break out the Champagne for the bold decision by the California Energy Commission (CEC) in approving new energy efficiency standards for TV sets sold in California!
Recent blogs (see archives: October 12th and 26th, November 2nd and 9th) covered the brouhaha that the CEA and some TV manufacturers created with the usual scare tactics about job loss, economic disaster to businesses, and all the other assorted ills that have been projected with every previous CEC energy efficiency standard. Fortunately, the CEC knows from actual experience that these standards improve economic conditions – for California consumers who will enjoy reduced operating costs (i.e. electricity bills). In energy efficiency matters, other states often adopt the CEC rules, so here’s hoping that this positive trend to reduce energy consumption continues across the nation.